Rental Property Management: Tenant Screening Decisions

Rental property management is a tough business. Finding and maintaining homes is the first challenge. Once a listing is available, the next step is finding a qualified tenant. Tenant screening software is a great tool for property managers, but subjective decisions are also sometimes required.

Tenant Screening

The screening process is fairly straightforward, but there are differences among states. For example, the credit check acceptance in New Mexico is much different than in an eastern state like Florida. The basic set up of the screening is to find a reputable company to work with and to determine the depth of information an owner or manager wants on a potential tenant. Most screenings deal with credit and rental history, past evictions, criminal background, employment and income upon requested dates.

Watch this video on Propertyware Tenant Screening:

In New Mexico, a tenant can request the same report an interested party sees. Applicants have the opportunity to dispute any information that they feel is incorrect or misleading. But should an applicant be turned down if the screening reveals a less than positive credit history? If a tenant is attempting to make amends on their credit and make good on debts, should that be taken into consideration? In many instances, the owner or manager has the last say as to whether a credit check could be overlooked due to mistakes or attempts to fix it.

Many property managers require employment from their potential tenants and some can require the income to be three times that of the monthly rental rate. Some managers can deny acceptance into a rental agreement if the tenant, who has employment, hasn't been employed for a year or more with the same company. Because of the unstable labor market in recent years, including increased layoffs and related economic problems, property owners and managers may opt to reconsider employment history issues.

Criminal Checks

Aside from the credit and employment components of a tenant screening, there may also be criminal background checks. These gather information from a criminal database that includes a sex offender list, or even the Treasury Departments' list of terrorists and drug traffickers. When looking at potential tenants, it is important to consider the safety of the property as well as the neighbors and surrounding areas.

A person that is arrested in Arizona for armed robbery, who have done their time and is attempting to rent in New York could be turned down due to a conviction of the crime. Petty crimes, like shoplifting or vandalizing, might be overlooked in consideration of the time since the offense and the application entry.

However, some offenses can be red flags to rental property owners, such as when there is a violent, domestic, or sexual offense on a person's record. These are things that most property managers and owners shouldn't easily forgive.

Mistaken Identity

One problem with the screening process, if it is done based on partial names and Social Security Numbers, can be "mixed files." Similar names or SSNs can come up on a screening list and show a tenant with a negative renting history or credit past that isn't the actual potential renter. There is also the case of identity theft which could damage a person's credit and other pertinent information to the point that a tenant could be unnecessarily black-listed.

Housing Court

Another screening tool option is housing court case files. This poses another issue, as well. When a tenant's name or SSN shows up in reference to a housing court case, decisions may be based on the tenant's "guilt by association." The rental property owners may look at the case in general and disregard the rulings, judgments, and settlements. Tenants involved in a housing court case are lumped into a group whether they hold any fault in the event or are even the party placing the complaint or filing suit.

Personal Reference Checks

Some screenings go to the extent of requiring a personal reference as to the tenant's character and personality to help make the decision. Screening information isn't solely based on the applicant's criminal background or credit history. A previous property manager or owner may also be contacted for information that helps in the screening process.

Rental property management requires a wide range of skills and knowledge. In addition to understanding the real estate market, you also need to be equipped with business management skills. This requires people skills and an open heart and mind. Choosing a tenant for a rental property can be based solely on a tenant screening report, but with so many variables it can make sense to take each tenant as a case by case scenario.

Tracking each step in the screening process is essential, and the right tools and software can simplify things. If you're a rental property manager looking for some great online tools take the time to watch this demo to see what Propertyware can do for you.